Method and System for Stabilizing Digital Currency

ABSTRACT

The present invention is directed to systems and methods for maintaining a stabilized digital currency is provided. The systems and methods include monitoring for one or more digital transactions in a service provider network utilizing digital coins, minting and storing a predetermined percentage of reserve tokens of the digital coins in a reserve pool, providing compensation for the one or more digital transactions as utility tokens of the digital coins, and monitoring current value of the digital coins for the digital currency for inflation or deflation.

FIELD OF THE INVENTION

The present invention relates to a system and method suitable forstabilizing a value of digital currency. In particular, the presentinvention relates to a system and method for stabilizing digital coinsusing a combination of tokens to adjust a value of the digital coins.

BACKGROUND

Generally, cryptocurrencies are digital assets that use strongcryptography to secure financial transactions, control the creation ofadditional units, and verify the transfer of said transactions.Cryptocurrency networks typically utilize a blockchain to validatetransactions and provide tokens or coins and rewards miners thatcontribute to the validation process. Tokens or coins that are earned bycontributors can be utilized in other financial transactions eitherthrough trading, market exchanges, or other exchanges. Unliketraditional currencies, cryptocurrencies primarily operate outsideexisting banking and governmental institutions. Therefore, it isimportant to try and provide stabilization of the tokens and coins tomake them a reliable currency for users.

Traditionally, stabilization methods and systems rely on third partyhuman intervention to assist in stabilizing a value of a coin. Forexample, some systems can sell bonds to individuals in an effort providea vehicle for stabilizing coin values. Relying on bonds, however,requires active and manual participation from users outside of thesystem utilizing the coins. Conventional solutions to provide a stabletoken can utilize and typically involve having the tokens be backed byfiat currency. For example, a token can be backed by fiat current thatguarantees that each token always has a set value (e.g., equal to $1).

SUMMARY

There is a need for improvements for stabilizing digital currency,particularly ERC-20 tokens. The present invention is directed towardfurther solutions to address this need, in addition to having otherdesirable characteristics. Specifically, there is a need for systems andmethods to create a stable token without the reliance on manual userintervention. The present invention provides token stabilization basedon algorithms such that there is no need to create an incentive forusers to participate in the stabilization of the token This should makethe stabilization easier to achieve. The present invention can beutilized for virtually any use case that requires a stable token andinvolves transactions.

In accordance with example embodiments of the present invention, amethod for maintaining a stabilized digital currency is provided. Themethod includes monitoring for one or more digital transactions in aservice provider network utilizing digital coins, minting and storing apredetermined percentage of reserve tokens of the digital coins in areserve pool, providing compensation for the one or more digitaltransactions as utility tokens of the digital coins, and monitoringcurrent value of the digital coins for the digital currency forinflation or deflation.

In accordance with aspects of the present invention, the monitoring thecurrent value of the digital coins for the digital currency forinflation or deflation includes monitoring an amount of supply of thedigital coins, identifying an inflation period or deflation period inthe digital coins based on the current value and the amount of supply ofthe digital coins, determining an amount for a new supply of digitalcoins to stabilize the inflation period or deflation period, andconverting at least one of utility tokens to reserve tokens or reservetokens to utility tokens to meet the new supply of digital coins and thevalue of the digital coins is stabilized. The inflation period canrequire converting the utility tokens to the reserve tokens. Thedeflation period can require converting the reserve tokens to theutility tokens.

In accordance with aspects of the present invention, the digital coinsinclude utility tokens used for trading and compensation for servicesprovided. The method can further include maintaining the reserve tokensin a fixed size reserve pool and a variable size investor pool. Thereserve tokens can be distributed within at least one of the reservepool and the investor pool to stabilize the utility token values. Thereserve tokens in the investor pool can be periodically converted topayment to investors. The digital currency can include security tokensrepresenting tradeable shares that are used to pay periodic dividends.The investor pool can be configured to store reserve tokens from acurrent period of time in a first portion, store reserve tokens from aprevious period of time in a second portion, and pay out the reservetokens the previous period of time to investors at an end of the currentperiod of time.

In accordance with example embodiments of the present invention, systemfor maintaining a stabilized digital currency is provided. The methodincludes at least one miner node for triggering digital currencytransactions that affect at least one of a current value or an amount ofsupply of digital coins for the digital currency and a stabilizer devicedesigned to monitor for one or more digital transactions in a serviceprovider network utilizing digital coins, mint and store a predeterminedpercentage of reserve tokens of the digital coins in a reserve pool,provide compensation for the one or more digital transactions as utilitytokens of the digital coins, and monitor current value of the digitalcoins for the digital currency for inflation or deflation.

In accordance with aspects of the present invention, the monitoring thecurrent value of the digital coins for the digital currency forinflation or deflation includes monitoring an amount of supply of thedigital coins, identifying an inflation period or deflation period inthe digital coins based on the current value and the amount of supply ofthe digital coins, determining an amount for a new supply of digitalcoins to stabilize the inflation period or deflation period, andconverting at least one of utility tokens to reserve tokens or reservetokens to utility tokens to meet the new supply of digital coins and thevalue of the digital coins is stabilized. The inflation period canrequire converting the utility tokens to the reserve tokens. Thedeflation period can require converting the reserve tokens to theutility tokens.

In accordance with aspects of the present invention, the digital coinscan include utility tokens used for trading and compensation forservices provided. The system can further include maintaining thereserve tokens in a fixed size reserve pool and a variable size investorpool. The reserve tokens can be distributed within at least one of thereserve pool and the investor pool to stabilize the utility tokenvalues. The reserve tokens in the investor pool can be periodicallyconverted to payment to investors. The digital currency includessecurity tokens representing tradeable shares that can be used to payperiodic dividends. The investor pool can be configured to store reservetokens from a current period of time in a first portion, store reservetokens from a previous period of time in a second portion, and pay outthe reserve tokens the previous period of time to investors at an end ofthe current period of time.

In accordance with example embodiments of the present invention,computer program product for maintaining a stabilized digital currency,is provided. The computer program product includes a computer readablestorage medium having program instructions embodied therewith, theprogram instructions readable/executable by one or more computingdevices to cause the one or more computing devices to monitor for one ormore digital transactions in a service provider network utilizingdigital coins, mint and store a predetermined percentage of reservetokens of the digital coins in a reserve pool, provide compensation forthe one or more digital transactions as utility tokens of the digitalcoins, and monitor current value of the digital coins for the digitalcurrency for inflation or deflation.

BRIEF DESCRIPTION OF THE FIGURES

These and other characteristics of the present invention will be morefully understood by reference to the following detailed description inconjunction with the attached drawings, in which:

FIG. 1 is an exemplary system for implementing the present invention;

FIG. 2 is an example process using different tokens for stabilizingdigital coins, in accordance with the present invention;

FIG. 3 is an example initial state of the reserve and investor pool, inaccordance with the present invention;

FIGS. 4A and 4B is an example process for adjusting digital coin valueduring a deflation period, in accordance with the present invention;

FIGS. 5A, 5B, and 5C is an example process for adjusting digital coinvalue during an inflation period, in accordance with the presentinvention;

FIGS. 6A and 6B is an example process for adjusting digital coin valueduring an inflation period, in accordance with the present invention;

FIG. 7 is an example process for adjusting digital coin value during aninflation period, in accordance with the present invention;

FIG. 8 is an example of monthly input during a simulation, in accordancewith the present invention;

FIG. 9 is an example of a predicted number of viewers during asimulation, in accordance with the present invention;

FIG. 10 is an example of no stabilizing action taken during asimulation;

FIG. 11 is an example of stabilizing action taken during a simulation,in accordance with the present invention;

FIG. 12 is an example of a number of developers and digital coin priceover time during a simulation, in accordance with the present invention;

FIG. 13 is an example of a predicted growth of the investor pool duringa simulation, in accordance with the present invention;

FIG. 14 is an example of a predicted growth of the investor pool duringa simulation, in accordance with the present invention;

FIG. 15 is an exemplary computing architecture for devices utilized inaccordance with the present invention.

DETAILED DESCRIPTION

An illustrative embodiment of the present invention relates to a systemand method for stabilizing digital coins utilized in a cryptocurrencybased network. In operation, the present invention provides digitalcoins as part of a cryptocurrency compensation system. In someembodiments, the digital coins can be ERC-20 tokens or similar digitaltokens used by developers to compensate miners for the resources thatthey are providing to a network/service. The digital coins can becryptocurrency tokens earned for participation within a blockchainand/or purchased through an exchange. In some embodiments, the digitalcoins can be used by network users to make transactions and compensateminers or other users participating within a network. For example, thedigital coins of the present invention can be used to compensate nodesfor relaying streams (e.g., providing bandwidth and other computationalresources) for a broadcasting service provider and/or to buy access tovideo streams, as discussed in greater detail with respect to U.S.patent application Ser. No. 15/954,473, incorporated herein byreference.

FIGS. 1 through 15, wherein like parts are designated by like referencenumerals throughout, illustrate an example embodiment or embodiments ofimproved operation for providing stable digital coins or tokens for acryptocurrency, according to the present invention. Although the presentinvention will be described with reference to the example embodiment orembodiments illustrated in the figures, it should be understood thatmany alternative forms can embody the present invention. One of skill inthe art will additionally appreciate different ways to alter theparameters of the embodiment(s) disclosed, such as the size, shape, ortype of elements or materials, in a manner still in keeping with thespirit and scope of the present invention.

FIG. 1 depicts an exemplary system 10 for implementing aspects of thepresent invention. In particular, FIG. 1 depicts an illustrative system10 for use in accordance with the method for providing a service to endusers and compensating third parties for assisting in providing saidservice. In some embodiments, the compensation earned in said servicecan be digital currency or digital coins. The system 10 can include anetwork of devices that can include at least one developer 12 (e.g.,broadcaster), a plurality of miner nodes 14 (e.g., edge nodes), and aplurality of subscriber devices 16 (e.g., subscriber devices). In someembodiments, the developer 12 is configured as a service provider thatutilizes one or more intermediary miner nodes 14 to supply services tosubscriber device 16. For example, the developer 12 can be abroadcasting service provider configured to offer multimedia streamingservices to subscribers for a fee. The multimedia can be delivered tosubscriber devices 16 using a combination of miner nodes 14 thatvolunteer their resources (e.g., bandwidth) in exchange for compensation(e.g., digital coins). In exchange for delivering the multimedia tosubscriber devices 16 on behalf of the developer 12, the developer 12will compensate the miner nodes 14 with digital coins. An example ofsuch a system and method is discussed in greater detail with respect toU.S. Patent Applications 62/535,263 and Ser. No. 15/954,473,incorporated herein by reference.

In some embodiments, the system 10 can include a stabilizer 18 that isconfigured to monitor transactions throughout the network of developers12, miner nodes 14, and subscriber devices 16 and monitor the value of adigital coin (e.g., via exchange) associated with actions associatedwith said network. In particular, the stabilizer 18 can monitor fortransactions in which digital coins are exchanged and run astabilization algorithm to evaluate the value of the digital tokens andactions needed to stabilize the value, if necessary. For example, thestabilizer 18 can identify each instance that a developer 12 providesdigital coins to miners 14, in exchange for services performed (e.g.,mining, providing services to subscriber devices 16, etc.), and run astabilization process. The stabilizer 18 can be an integral part of thetoken (e.g., ERC-20) and its logic can be written in the smart contractof the token.

In some embodiments, each of the developer 12, the plurality of minernodes 14, the plurality of subscriber devices 16, and the stabilizer 18can be a general-purpose computer or a specialized computing system. Forexample, the developer 12 can include a single computing device, acollection of computing devices in a network computing system, a cloudcomputing infrastructure, or a combination thereof. Similarly, each ofthe developer 12, the plurality of miner nodes 14, the plurality ofsubscriber devices 16, and the stabilizer 18 can be configured toestablish a connection and communicate with one another over atelecommunication network(s). As would be appreciated by one of skill inthe art, the telecommunication network(s) may include any combination ofknown networks. For example, the telecommunication network(s) may becombination of a mobile network, WAN, LAN, or other type of network. Thetelecommunication network(s) may be used to exchange data between theeach of the developer 12, the plurality of miner nodes 14, the pluralityof subscriber devices 16, and the stabilizer 18 and/or to collect datafrom additional sources.

In some embodiments, the stabilization of the digital coins of thepresent invention can be provided by three main components, where eachof the components can be associated with a different ERC-20 token (orother token standard). The three types of tokens can be identified asutility tokens, reserve tokens, and security tokens.

All of the transactions within the system 10 of the present inventioncan involve one or more of the utility tokens, reserve tokens andsecurity tokens for the digital coins. In some embodiments, the digitalcoins can define transfer and transferFrom functions based on the ERC-20token standard, such that said functions are called every time some ofthe utility tokens, reserve tokens and security tokens for the digitalcoins are transferred between different accounts and/or locations (e.g.,being used as compensation, bought, sold, traded, converted, etc.). Thestabilization algorithm can be run for every time a digital cointransaction occurs, and can be implemented within the transfer andtransferFrom functions. In other words, any transaction involving thetoken changing ownership ensures that the stabilization process (e.g.,as discussed with respect to FIGS. 2-7) is automatically run. This makesit possible to use this design for any and all use cases that require astable cryptocurrency or digital currency. In this way, the digitalcoins can be stabilized no matter how they are used because the samefunctions are used to transfer the tokens between parties. Thisfunctionality protects the stabilization, even if some party chooses tolist the digital coins on an exchange, or the token is used for purposesoutside of the network of the present invention.

In some embodiments, the utility tokens can represent a stable token ofthe digital coins tied to a fiat currency and can be allocated as aninitial fixed quantity of tokens to be distributed as compensation. Thetoken can be traded in an exchange, or it can be used by the network tocompensate minors providing services within a system (e.g., system 10).The market cap will be modified over time to guarantee that digitalcoins equals a target value of $1 USD. For example, the utility tokenscan have a target value of $1 USD per token. As would be appreciated byone skilled in the art, any combination of quantity, fiat currency, andtarget value can be utilized without departing from the scope of thepresent invention. In some embodiments, the target value can be peggedto the value of a Consumer Price Index (CPI). In this way, it would bepossible to implement a decentralized and transparent money policy thatdoes not require any human input and that can be independent from anygovernment or official agency.

In some embodiments, the reserve tokens can be utilized to help regulatethe value of utility tokens (e.g., digital coins). The value of thereserve tokens is equal to that of utility tokens and can be used toadjust market value of digital coins for stabilization. The reservetokens can be stored and transferred between a reserve pool and aninvestor pool. During operation, the reserve tokens can be transitionedbetween the two pools or be converted back into utility tokens fordistribution. In some embodiments, after a predetermined period of time,a portion of the reserve tokens can be withdrawn from the investor poolfor distribution to investor as part of a dividend. For example, at theend of each financial quarter a portion of the reserve tokens within theinvestor pool can converted into Ethereum (ETH) shares or fiat money tocompensate investors. In an alternative embodiment, the system canfunction without utilization of an investor pool. For example, insteadof transferring tokens to the investor pool, the system can “burn”unneeded tokens without payouts, or just let the number of reservetokens increase indefinitely.

In some embodiments, the security tokens represent a proportion ofshares investing the digital coins and can influence how distributionscan be paid out as a dividend. In particular, the security tokens canrepresent a percentage of the shares of digital coins that an investorowns in the digital currency and can be traded on an exchange dealing incryptocurrencies.

In some embodiments, the value for the digital coins can be pegged to agovernment issued currency (e.g., fiat currency). For example, one unitof the digital coins can be pegged to one United States Dollar (USD),such that one digital coins is worth $1 USD. In some embodiments, thevolume of the digital coins will be controlled such that only a fixedamount of digital coins will be put in circulation at a given point intime. An initial value and volume of digital coins supply will generatea market cap. The market cap can be determined by multiplying the numberof digital coins in circulation by the value per coin. For example, if 5thousand digital coins are in circulation at an initial price of $1 USD,then the market cap will be $5,000. In some embodiments, if theequivalence between digital coins and USD changes, the system and methodof the present invention can modify the amount of digital coins incirculation, by minting or burning tokens, and thus bringing back themarket cap to its initial value. A result of such modification, theequivalence of digital coins to USD can be re-established.

FIG. 2 provides an exemplary process 200 for providing the method forstabilizing digital coins in accordance with the present invention. Inparticular, FIG. 2 depicts an initial diagram of the process 200 for howthe stabilizer 18 monitors transactions and utilizes the differenttokens to maintain stability of the digital coins (e.g., try to maintainthe pegged currency value). During an initial setup of the process 200,a predetermined quantity of digital coins is made available to investors(e.g., as security tokens) for trade on an exchange and to developers orservice providers (e.g., as utility tokens) to be provided ascompensation to miner nodes 14 dedicating resources to the developers orservice providers within the system 10.

At step 100, some predetermined quantity of digital coins are purchasedor otherwise obtained by developers for use within their network. Insome embodiments, the tokens can be made available via a tradingexchange platform or purchase from a bank source. In some embodiments,the tokens are made available to users through a smart contract on ablockchain. At step 102 some portion of the initial quantity of digitalcoins is made available to developers as utility tokens for distributionas compensation in return for services rendered by miners (e.g., viasystem 10). In some embodiments, the developers are multimediabroadcasters that use intermediary miner nodes to stream multimedia tosubscribing user devices and compensates with the utility tokens.

At step 104 digital coin transactions are performed within the serviceprovider network (e.g., system 10) and reserve tokens are minted basedon those transaction (i.e., an amount of compensation to be paid tominers for that transaction). In some embodiments, digital cointransactions can be work performed by miner nodes 14 on behalf ofdevelopers 12 in exchange for digital coin compensation (e.g., inutility tokens). For example, at step 104, miner nodes can receive amultimedia stream from a developer and transmit the multimedia thesubscribing end users in return for digital coin compensation. Inresponse to such a transaction, in some embodiments, the process 200 caninitiate a minting process in which a percentage of reserve tokens areminted and added to a reserve pool and/or investor pool. The amount ofminted reserve tokens can be constant and equal to the number of digitalcoins that are being transferred in the transaction (e.g., during stableperiods) or the amount can be variable based on circumstances (e.g.,inflation period, depression period, etc.), as discussed in greaterdetail herein. For example, as depicted in FIG. 2, 20% of the digitalcoin compensation paid to the miners can be minted as reserve tokens. Aswould be appreciated by one skilled in the art, any value can be usedfor minting reserve tokens and is not limited to 20% of the compensationpaid or even tied to the compensation paid. The percentage amount canfluctuate and support just about any percentage of the total paid tominers, such that the more transactions the system is experiencing,could result in a lower the percentage needed per transaction tostabilize the token

At step 106 a compensation of utility tokens can be paid to the minersin exchange for services provided on behalf of the developers. In someembodiments, the compensation can be in the form of utility tokens orcan be paid in digital coins (converted from utility tokens) accordingto a previously agreed rate. The amount or percentages of the agreedupon compensation can be paid in full or reduced based on circumstances(e.g., inflation period, depression period, etc.), as discussed ingreater detail herein. For example, as depicted in FIG. 2, 100% of theagreed upon compensation can be paid to the miners. At step 108 theminers can elect to convert any received tokens or coins to fiatcurrency (e.g., USD) or other currency (e.g., digital currency) throughone or more exchanges.

At step 110 the reserve tokens minted in step 104 can be allocated tothe reserve pool and/or the investor pool. The reserve pool can have afixed size while the investor pool can be used to hold the surplus ofreserve tokens. The present invention is always adjusting to guaranteethat the reserve pool is full. Thus, when new tokens are minted, if thereserve pool is not full they will be stored there, otherwise, they willbe stored in the investor pool. The purpose of the reserve pool is toalways have a minimal amount of reserve tokens that can be convertedback into utility tokens during an inflation period, as discussed ingreater detail herein. The amount of reserve tokens needed can varybased on the amount of inflation experienced by the digital coin value.In some embodiments, during an inflation period the amount needed may behigher than 100%.

In some embodiments, reserve tokens stored in the investor pool can beallocated based on a predetermined period of time in which they werereceived and paid out periodically to investors who own security tokens.For example, reserve tokens can be stored in the investor pool based onthe fiscal quarter when they were generated and at the end of everyquarter the reserve tokens from the previous quarter will be paid out toinvestors proportionally to their security tokens (e.g., shares). Theamount of reserve tokens in the investor pool may not always increasemonotonically because, during high inflation periods, it may benecessary to convert a high number of reserve tokens into digital coins,and the reserve pool may be insufficient. In this case, the remainingrequired reserve tokens will be taken from the investor pool.

At step 112 investors who own security tokens can receive payments fromthe investor pool. In some embodiments, the investors can receiveperiodic dividends based on an amount of shares of the tokens that theinvestors own and the amount of reserve tokens available in the investorpool. For example, at the end of each fiscal quarter, each investor willbe paid a percentage of the reserve tokens in the investor poolcorresponding to the percentage of shares, of all available shares,owned for the digital tokens. In some embodiments, payments to investorscan be performed by converting reserve tokens into ETH or fiat currencyproportionally to the amount of security tokens that each investorholds. At step 114 investors can elect to exchange reserve tokensreceived as dividends (in step 112) for fiat currency or buy moresecurity tokens for increased dividends by trading on an exchange.

In operation, the system 200 can be used by some combination of actorsor agents can be participants within the process 200. In someembodiments, the actors can include developers, minors, end users,investors, and bankers. The developer can be a service provider, such asfor example, a multimedia streaming service provider (e.g.,broadcasters), as discussed with respect to U.S. Patent Application Nos.62/535,263 and Ser. No. 15/954,473, incorporated herein by reference intheir entirety. The miner (e.g., node users) can be an intermediarycontributing computational resources to the developer to deliverservices to end users. For example, the miners can relay a multimediastream from a developer to subscribing end user devices. In someembodiments, the miner can be compensated, by the developer, in utilitytokens for the computational resources provided. The end users can beusers paying for the service provided by the developer and received viathe miner, such as for example, a subscriber to a multimedia streamingservice to receive multimedia streams. In some embodiments, the endusers can pay, the developer, for the multimedia streaming services indigital coins or other fiat currency. The investor and banker can beactors that buy and sell reserve tokens for the digital coins over anexchange or other market. The investors can buy shares of reserve tokensthrough the exchange in the form of security tokens and receive periodicdividends based on their shares. The bank can manage the exchange ofreserve tokens between investors and make digital coins available todevelopers for use as compensation as utility tokens to other actors(e.g., miners).

During operation, the stabilization of the digital token can fluctuatebetween stable periods, deflation periods, and inflation periods. Duringstable periods, the value of the digital coins is stable (e.g., digitalcoins $1 USD), such that no change to the market cap of digital coins isnecessary. As new digital coins transactions are being generated, eachtransaction can cause a certain amount of reserve tokens to be minted orconverted from utility tokens to reserve tokens, thus, adjusting themarket cap value for the digital coins (e.g., step 110). For example, asdepicted in FIG. 2, 100% of the utility tokens paid to miners will beminted as reserve tokens. The minted reserve tokens will be stored inthe reserve pool if it is not full, otherwise, reserve tokens will bestored in the investor pool. The tokens stored in the investor pool willaccumulate for two predetermined periods of time (e.g., quarters), andat the end of a second period of time, the tokens accumulated in thefirst period of time will be paid out to investors proportionally totheir shares (e.g., step 112). The number of shares can be based on thetotal number of security tokens held by the investor.

During a deflation period, the price of digital coins will tend todecrease over time (e.g., digital coins <$1 USD). To counteract thedecreasing value, it may be necessary to lower the market cap of thedigital coins. In some embodiments, increased digital coin values can beachieved by converting utility tokens into reserve tokens instead ofminting them (e.g., at step 104). In some embodiments, a smart contractcan be used to calculate the current valuation of digital coins and thenforce the conversion process accordingly. The exact amount of tokensthat will need to be converted will depend on the deflation rate. Thehigher the number of transactions occurring, the lower the percentage oftokens for each transaction that needs to be converted into reservetokens. This is important because if the overall number of transactionis low, and 100% of the tokens of a transaction needs to be converted,then the miners would not earn any utility tokens.

During an inflation period the price of digital coins can increase overtime (e.g., digital coins >$1 USD). To counteract the increasing value,it may be necessary to increase the market cap of the digital coins. Insome embodiments, decreased digital coin values can be achieved byconverting reserve tokens into utility tokens. In some embodiments, asmart contract can be used to continuously checks the value of digitalcoins against the predetermined fiat currency (e.g., USD). For example,once the value of one digital coins is above $1 USD then a certainamount of reserve tokens will be moved to the digital coins smartcontract for conversion to utility tokens, and thus increase the supplyof digital coins.

Referring to FIG. 3, an exemplary example of an initial state of thereserve pool and the investor pool is provided. In particular, FIG. 3shows the initial state of the reserve pool and investor pool at thebeginning of a stable period. A stable period can be beneficial for allactors within the network (e.g., network 200). For example, a stabledigital coin value will allow developers to reliably estimate how muchthey are spending to deliver services to end users, and similarly allowminers to reliably estimate how much they will earn in exchange forcomputational resources contributed to delivering said services. Thereliable estimates are possible because the value should be consistent,eliminating one unknown variable when providing estimates. Similarly,with a stable token it is easier for a miner to more accuratelyestablish the price for contributed resources (e.g., Gbps of bandwidth),and thus guarantee a positive return. In contrast, with an unstabletoken, miners may need to ask for a higher price for contributedresources to account for possible losses generated by the possibleabrupt devaluation of the digital coin. A stable token also guaranteesthat miners receive 100% of the digital coins for a given transaction,whereas during periods of inflation or deflation this may not be thecase. Therefore, during a stable period there is no incentive for any ofthe participating actors to change the stabilization.

In some embodiments, the investor pool can be divided into two portionscorresponding to two periods of time. In the example depicted in FIG. 3,with respect to the investor pool, the first portion (e.g., period oftime) has 30 million reserve tokens and the second portion (e.g., periodof time) has 0 reserve tokens. In some embodiments, the first portioncan be locked with new reserve tokens being added only to the secondportion (when the reserve pool is full). FIG. 3 also shows that thereserve pool is 80% full for the predetermined quantity of reservetokens. As discussed above, if the reserve pool is less than 100% thenreserve tokens may not deposited into the investor pool and may beborrowed from, which would correspond to the second portion of theinvestor pool (e.g., the second period of time).

Continuing with FIG. 3, the depicted investor pool represents an exampleof the investor pool at the beginning of a new fiscal period (e.g.,quarter). As discussed herein, in some embodiments, at the end of afiscal period, the reserve tokens in the first portion of the investorpool will be paid out to investors and the reserve tokens in the secondportion will be transferred (e.g., the reserve tokens generated in theprevious fiscal period) into the first portion until the next fiscalperiod ends. Therefore, at the beginning of a new fiscal period, thesecond portion will be empty (e.g., 0%). The reserve pool is not fullyet, and thus as new transactions are generated by the users of thesystem 10, the reserve pool will start to fill while the investor poolwill remain unchanged. Once the reserve pool is 100% full, every newlyminted reserve token will be transferred to the second portion of theinvestor pool. In a stable period, the investor pool will continue tofill at the maximum rate over time, and thus allow the investors tomaximize their dividends in each quarter.

In some embodiments, when a deflation period occurs (e.g., digital coin<$1 USD), steps can be initiated by the stabilizer 18 to stabilize thedigital coin value. In particular, during a deflation period, apercentage of the utility tokens to be paid to miners 14 will beconverted to reserve tokens. During a deflation period it may bepreferable to generate an amount of reserve tokens equal to apredetermined amount (e.g., 10%) of the digital coins transactions butnot all as minted reserve tokens, as done during a stable period. Insome embodiments, the stabilizer 18 can determine a percentage ofreserve tokens that should be minted and a percentage of the utilitytokens should be converted into reserve tokens. For example, as depictedin FIG. 4B, the stabilizer 18 can determine that 5% of the amount ofutility tokens in each transaction needs to be converted into reservetokens then, in the following transactions only 5% of reserve tokenswill be minted to total 10% new reserve tokens per transaction.Therefore, in this example, after a transaction (e.g., step 104), 5%utility tokens are converted to reserve tokens, 5% reserve tokens areminted, and only 95% of utility tokens are paid out to the miner(s)instead of the 100% received during stable or inflated periods. Thegreater the deflation rate, the smaller the value that the miners willreceive, while the value of the digital coins are stabilized. In someembodiments, the percentage paid to the miners can be static and notadjust, regardless of the level of inflation or deflation of the coinvalue.

By converting utility tokens to reserve tokens and reducing the numberof utility tokens or digital coins paid to miners, the total supply ofdigital coins will decrease and the value of the digital coins increasesbecause the market cap will be automatically adjusted. The stabilizationprocess may not be a onetime operation but can be performed continuouslyduring a deflation period. This means that as the valuation of onedigital coins gets closer to $1, the system will continue to recalculatethe amount of utility tokens that need to be converted and thecorresponding percentage for transaction. As before, the newly createdreserve tokens will first fill the reserve pool and then the investorpool at the maximum rate. Therefore, during deflation periods investorswill still be able to maximize their dividends.

Referring to FIG. 4A, an example of a stabilization process 400 isprovided. In this example, the initial state of process 200 includes aninitial digital coins supply of 500 million and an initial market cap isequal to the 500 million multiplied by the fixed currency value of $1USD to equal $500 million USD. During a deflation period the value ofthe digital coins drops to $0.9 USD and the current supply is X tokensto have a market cap of $0.9X. By monitoring the market value, adeflation period can be identified (e.g., by stabilizer 18) and adeflation period can be initiated. During this deflation period, system200 will keep the value of digital coins stable by determining whatshould be the new supply of digital coins (e.g., to adjust the marketcap to reflect a digital coin value of $1 USD) (STEP 402). If the marketcap is assumed to be constant then the new supply will be equal to Yrepresenting the market cap divided by the target value of $1 USD, andthus, Y is equal to $0.9X divided by $1 or $0.9X. Using the values forthe initial state yields Y equals $0.9 multiplied by 500 million toequal 450 million. With the deflated market value Y the stabilizer 18can determine an amount of digital coins to convert to stabilize thevalue (STEP 404). In this case, the conversation of utility tokens toreserve tokens would be equal to X minus Y. Thus, in this example, 500million minus 450 million results in a conversion of 50 million utilitytokens (over some period of time). This amount can be taken as apercentage from every utility token resulting from digital coinstransactions until the value of the digital coin is stable again (e.g.,equal to $1 USD) (STEP 406) or in a lump sum. When taking a percentageof the steps in process 400 can repeat itself until stabilization of thedigital coin value is reached.

Based on the process 400, it is unlikely that the process 200 will stayin a deflation period for a long time because the price will beconstantly adjusted and none of the actors participating within theprocess 200 would gain from this deflation period. Otherwise, some actorcould try to trigger deflation and invest resources to avoid going backto a stable period. Instead, during a deflation period, the system 200will tend to be used less because it will be less or not remunerativeenough for at least the miner nodes. This in turn will lower the totalnumber of transactions performed over this period, which will increasethe amount of tokens that need to be converted into reserve tokens.Finally, this will decrease the earnings of miners even more and thuseven less people will use system 10. Eventually, no transactions wouldbe generated and the investors would not be able to receive anydividend. This shows that nobody has a long-term interest in staying ina deflation period.

Referring to FIG. 4B, FIG. 4B depicts example results of thestabilization process 400 during a period of deflation. In the exampleof FIG. 4B, the storage of reserve tokens within the investor pool andreserve pool, represent values during the start of a new fiscal period.In this example, the reserve pool has a total capacity of 20 milliontokens and is 80% full. Since it's the beginning of the fiscal period,the investor pool contains 0 reserve tokens in the first portion (e.g.,the current fiscal period) and 30 million reserve tokens in the firstportion (e.g., the previous fiscal period) to be paid out to investorsat the end of the current fiscal period. As shown in FIG. 4B, and as aresult of the process 400 in FIG. 4A, at each transaction (step 104) 5%of the amount of the utility tokens for the transaction are minted asnew reserve tokens, 5% of the utility tokens are converted to reservetokens, and 95% of the utility tokens are paid out to the miners forcontributions (step 108). Thereafter, the 10% of reserve tokens (mintedand converted) can be added to the reserve pool. These values willadjust over time as the value of the digital coin are adjusted.

In some embodiments, when a inflation period occurs (e.g., digitalcoin >$1 USD), steps are initiated by the stabilizer 18 to stabilize thedigital coin value. In particular, during an inflation period, apercentage of the reserve tokens in the reserve pool can be converted toutility tokens. During an inflation period it may be preferable tocontinue to mint new reserve tokens at the predetermined amount (e.g.,10%) for each of the digital coins transactions performed (e.g., step104), as done during a stable period. During the inflation period, theminers will continue to earn 100% of the earned utility tokens forcontributions. The stabilizer 18 can also determine a number of reservetokens in the reserve pool to be converted to utility tokens to lowerthe value of the digital coins. Therefore, in this example, after atransaction (e.g., step 104), 44% reserve tokens are converted toutility tokens, 10% reserve tokens are minted, and only 100% of utilitytokens are paid out to the miner(s). The greater the inflation rate, thelarger number of reserve tokens from the reserve pool will be convertedto utility tokens, while the value of the digital coins are stabilized.In some embodiments, when the reserve pool is empty, reserve tokens canbe taken from the investor pool to be converted to utility tokens. Inoperation, the system uses the market cap to determine the new tokensupply and the difference with the current supply is the amount oftokens that need to be converted. This amount then can be calculated asa percentage of the reserve tokens. The reserve tokens can be burnedafter the conversion so they do not exist anymore, like they weretransformed from reserve tokens to utility tokens.

By converting reserve tokens to utility tokens and thus reducing thenumber of utility tokens purchased by developers, the total supply ofdigital coins will increase and the value of the digital tokensdecreases because the market cap will be automatically adjusted, asshown in FIG. 5B. The stabilization process may not be a onetimeoperation but can be performed continuously during a inflation period.This means that as the valuation of one digital coins gets closer to $1,the system will continue to recalculate the amount of reserve tokensthat need to be converted to utility tokens and the correspondingpercentage for each digital coin transaction. Because it is possible thereserve tokens can be pulled from the investor pool, during inflationperiods, investors may not be able to maximize their dividends.

Referring to FIG. 5A, an example of a stabilization process 500 isprovided. In this example, the initial state of process 500 includes aninitial digital coins supply of 500 million and an initial market cap isequal to the 500 million multiplied by the fixed currency value of $1USD to equal $500 million USD. During an inflation period the value ofthe digital coins drops to $1.05 USD and the current supply is X tokensto have a market cap of $1.05X. By monitoring the market value, aninflation period can be identified (e.g., by stabilizer 18) and adeflation period can be initiated. During this inflation period,stabilizer 18 will keep the value of digital coins stable by determiningwhat should be the new supply of digital coins (e.g., to adjust themarket cap to reflect a digital coin value of $1 USD) (STEP 502). If themarket cap is assumed to be constant then the new supply will be equalto Y representing the market cap divided by the target value of $1 USD,and thus, Y is equal to $1.05X divided by $1 or $1.1X. Using the valuesfor the initial state yields Y equals $1.05 multiplied by 500 million toequal 525 million. With the inflated market value Y, the stabilizer 18can determine an amount of digital coins to convert to stabilize thevalue (STEP 504). In this case, the conversation of reserve tokens toutility tokens would be equal to Y minus X. Thus, in this example, 525million minus 500 million resulting in a conversion of 25 millionreserve tokens. This amount can be taken as a percentage from thereserve pool, or investor pool if necessary (STEP 506). The steps inprocess 500 can repeat itself until stabilization of the digital coinvalue is reached.

Referring to FIG. 5B, FIG. 5B depicts an example of the storage ofreserve tokens within the investor pool and reserve pool, prior to anadjustment for inflation. In this example, the reserve pool has a totalcapacity of 20 million tokens and is 80% full with 16 million reservetokens. The investor pool has a 30 million reserve tokens in a firstportion and 10 million reserve tokens in a second portion. Continuingthe example in FIG. 5A, 25 million reserve tokens will need to beconverted into digital coins. As shown in FIG. 5B, and as a result ofthe process 400 in FIG. 5A, 44% (e.g., 25 million) of the reserve tokensare to be converted to utility tokens for the transaction and 100% ofthe earned utility tokens will be paid out to the miners forcontributions (step 108). These values will adjust over time as thevalue of the digital coin are adjusted. Given the distribution of thereserve tokens in the respective pools, all the tokens in the reservepool will be converted (16 million) together with 9 million reservetokens taken from the second portion of the investor pool, totaling therequired 25 million reserve tokens. FIG. 5C depicts the status of thereserve tokens in each of the investor pool and the reserve pool afterthe calculated reserve tokens have been converted to utility tokensduring the inflation process 500. In particular, the reserve pool isempty and the second portion of the investor pool is left with only 1million reserve tokens remaining. In this case, the amount of reservetokens available was enough for the conversion, and therefore the systemcontinued to generate new reserve tokens at the fixed 10% rate. Based onthe process 500, the amount of digital coins available will increase andthus it is expected that their market cap will be lowered.

Referring to FIG. 6A, an example of a best-case scenario for aninflation period is provided. In this example, the initial state ofprocess 600 includes an initial digital coins supply of 500 million andan initial market cap is equal to the 500 million multiplied by thefixed currency value of $1 USD to equal $500 million USD. The currentvaluation of the digital coins is $1.01 for a conversion amount ofreserve tokens equal to 5 million (e.g., $1.01*500 million−$500million=$5 million). This represents a best case scenario because, asdepicted in FIG. 6A, there is a full reserve pool (with 20 millionreserve tokens) and a large amount of reserve tokens is available inboth portions of the investor pool, and the amount of inflation thatneeds to be corrected is limited (e.g., 5 million or 8.3% of reservetokens to be converted). The reserve pool is full with a total of20,000,000 tokens that are sufficient to provide the 5,000,000 tokensrequired to stabilize value of the digital coins. Thus, in this case,the investor pool will not be touched. It should be noticed that afterthe conversion the reserve pool will not be completely full. Therefore,the newly generated reserve tokens will be stored there at the standard10% rate. FIG. 6B shows the distribution of the reserve tokens in thereserve pool after the conversion from FIG. 6A.

Referring to FIG. 7, an example of a worst-case scenario for aninflation period is provided. In this example, the initial state ofprocess 700 includes an initial digital coins supply of 500 million andan initial market cap is equal to the 500 million multiplied by thefixed currency value of $1 USD to equal $500 million USD. The currentvaluation of the digital coins is $1.04 for a conversion amount ofreserve tokens equal to 20 million (e.g., $1.04*500 million−$500million=$20 million). This can be considered a worst case scenariobecause the reserve pool is empty, the investor pool contains a limitedamount of tokens and the total amount of reserve tokens is notsufficient to offset the inflated value of digital coins (e.g., 20million reserve tokens, corresponding to 133% of the reserve tokens) asprovided by the present invention. More specifically, based on the totalamount of reserve tokens in FIG. 7 (e.g., 15 million) there is notenough reserve tokens in storage to stabilize the value of the digitalcoins. In this case, the system can convert the 15 million availablereserve tokens available into utility tokens to reduce the inflationamount and then, as new digital coins transactions are generated, newreserve tokens are minted and immediately converted back into utilitytokens to continue reducing the inflation.

In some embodiments, when there are insufficient reserve tokens toadjust inflation, the stabilizer 18 will need to calculate the new rateat which the reserve tokens should be minted to make the system stableagain in a short interval. For example, the process can be analyzedthrough an example where 5 million new reserve tokens need to beconverted. Assuming that there are 10 digital coins transactions persecond (tps) that move on average, totally a total of 1 thousand digitalcoins per second and that if it is preferred to stabilize the digitalcoin value in approximately 50 seconds. Based on these values, thestabilizer 18 will calculate how many reserve tokens need to be mintedfor every digital coin transaction. To generate the 5 million remainingreserve tokens in 50 seconds, it would be necessary to generate 100thousand reserve tokens per second. Thus, each digital coin transactionneeds to generate 10 thousand reserve tokens (e.g., 100,000/10). Itshould be noted that this example is an extreme case because it assumesthat the token value changes abruptly from $1 to $1.04 and thus thesystem needs to convert a big number of reserve tokens. In reality it isexpected that the inflation value will change gradually over time suchthat such an abrupt adjustment would not be necessary. Moreover, as soonas a change is sensed system 200 will implement its procedure tostabilize the token thus requiring a smaller amount of reserve tokens.

In in instances when reserve tokens are taken from the investor pool,the earnings of the investors will be impacted. To make this unlikely tohappen it is important to determine the correct size for the reservepool. If the reserve pool is too small then tokens in the investor poolmay need to be used too often and thus dividends could be impacted. Onthe other hand, if the reserve pool is too big, it may never be full orit could take a long time before it is full and this would impactnegatively the dividends as well because only few tokens would be storedin the investor pool. A simulation has been used to determine theoptimal size of the reserve pool. The results showed that having areserve pool with size 5 thousand tokens allows the stabilizer 18 tobalance values for the digital coins effectively, even when the investorpool is empty. At the same time, the simulation showed that the reservepool fills quickly during the early stages of process 200 and thenremains mostly full which implies that the impact on the investors'payout is minimal, as discussed in greater detail in the examplesimulation section.

In general, inflation periods should be very short because as soon asthe stabilizer 18 senses that the value of a digital coin is not equalto $1 USD, it will start the process described above to stabilize thedigital coin value. No actor participating in the process 200 wouldbenefit from a long inflation period. The investors could receivesmaller dividends and while miners 14 would continue to be paid with100% of the transactions, if the inflation continues it would benecessary to continue to convert reserve tokens into utility tokens andtheir amount may not be sufficient considering the reserve tokens thatare minted at every digital coins transaction and less developers woulduse system 200. That is because a higher digital coin price implies ahigher barrier for developers to buy new digital coins. Moreover, theprices set by miners would increase as well because of the fear that thevalue of digital coins may decrease quite abruptly. This in turn, wouldlower the number of transactions and thus the earning of miners.Therefore, even in this case, no entity has an interest in staying in aninflation period.

The ability to effectively stabilize the value of digital coins dependsalso on their demand. In fact, to correct a deflation period it isnecessary to have some digital coins transaction where a part of theutility tokens can be converted into reserve tokens. This may benecessary even during an inflation period if the amount of reservetokens to convert into utility tokens is not enough. Therefore, thehigher the demand of digital coins the higher the number oftransactions. Events that can influence the demand are i) prices appliedby miners, ii) usage by developers: demand will be high as long asdevelopers will pay less to use system 200 than the alternatives (e.g.,cloud platforms and CDNs) while having the same performance, iii)performance of the network and/or service: quality of service fromdevelopers to end users will increase or decrease the demand, and iv)popularity of the network: more new end users, developers, and minersparticipating in the system 200 will increase the number oftransactions. All these factors together will contribute to increasedemand and cause the value of digital coins stabilize, which in turnwill guarantee a predictable income for miners and a predictable expensefor developers.

In some embodiments, investors can be allowed to buy and trade securitytokens associated with the digital coins. Security tokens can be mintedin a fixed amount, each of them represents a share and they can betraded in exchanges. Security token holders, or investors, investing insecurity tokens may not have an effect on the stabilization of theutility token, instead, security token holders can receive dividendpayouts as a passive participant within the stabilization system. Forexample, security tokens can provide investors the right to receive aquarterly dividend. The dividends will be divided proportionally to theamount of security tokens or shares owned by each investor. The amountof dividends generated by process 200 depends on the number of digitalcoins transactions performed over a given period of time. As discussedherein, each digital coin transaction generates a certain amount ofreserve tokens that can be stored in the investor pool, after thereserve pool is full. As discussed previously, the investor pool canstore reserve tokens in two predetermined periods (e.g., fiscalquarters) and at the end of each predetermined period, the reservetokens of the previous predetermined period can be paid out while stillguaranteeing a reserve token supply in case of an extreme inflationperiod. As would be appreciated by one skilled in the art, during theinitial startup of the process 200, the first-time investors will needto wait two predetermined periods to receive their dividends, whileafter that they will be paid at every predetermined period. The pay outto investors consists in converting reserve tokens into Ethereum or fiatmoney. The reserve tokens converted in this way will be burnt andremoved from the calculation of the market cap.

Example-Simulator

A simulation of the processes of the present invention and simulationresults are provided herein. The simulation and results are provided forexemplary purposes and are not intended to limit the scope of thepresent invention. The discussion provided herein relates to thestabilization of the value of digital coins has been evaluated through acomputer simulation. The focus was on proving that this designeffectively pegs one digital coins to $1 USD and it is able to respondefficiently to inflation and deflation periods. Investors have beenconsidered as well by simulating quarterly payout to security tokenholders.

The simulator has been created by modifying BazaarBot an existingactor-based free market simulator engine. Its purpose is to simulate aneconomy where multiple actor can trade goods. Then, based on the demandand supply of each good, their change in price is simulated. Moreover,the profits of every actor are simulated as well. BazaarBot proved to bea very good starting point because it allowed us to simulate the changein price of digital coins. The main changes to the existing simulatorconsisted of creating new actor, developing the logic that they had tofollow to trade digital coins and modifying the system of beliefs thateach actor has.

The simulation consists of multiple rounds. In each round, a certainnumber of developers are delivering some video streams through someminers elected randomly to some end users. Each round represents a daywith 30 days representing a month. The results obtained in a roundbecome the starting conditions for the next round. This makes itpossible to simulate the behavior of the system over a period of monthsor years. Moreover, every quarter or three months the reserve tokens inthe investor pool are paid out to simulate the earnings of the securitytoken holders.

Developers are the entities that buy digital coins from the market andtransfer them to the miners that are delivering their video streams.Developers start with a certain amount of USD and digital coins in theiraccounts so they are ready to both stream and buy digital coins. Thenumber of developers changes at each round of the simulation based onthe starting conditions of the system. Those conditions specify thenumber of monthly developers and their average number of video streamsand viewers. The simulation is run for each day in a month, andtherefore the daily number of developers is equal to the number ofmonthly developers divided by the number of days in a month, which forsimplicity is assumed to always be 30. Then, for each day, each of thesedevelopers will pay to the miners an amount of digital coins (e.g.,utility tokens) equal to the one required to deliver a number of videostreams to a number of users specified in the starting conditions. Eachvideo stream is assumed to be a 1 Mbs video and last one hour. When thesystem is stable or under an inflation period an amount of reservetokens equal to the amount of digital coins transacted is generated andput inside the reserve pool if not full, otherwise it is moved to theinvestor pool. On the other hand, during a deflation period the reservetokens are generated as before, but in this case 10% of the digitalcoins transacted are removed from the market to help lower their price.

When developers buy digital coins from the market they are spending someUSD from their account. To simulate the profit of the developers it isnecessary to simulate the earnings that are generated by the fact thatsome people are viewing their video streams. This source of revenuecould come from advertisement, a subscription service, or a pay per viewmonetization strategy, and so on. These earnings are simulated asfollows:

A random number n is drawn from the interval [−25,75]

The bank account of the developer is increased by an amount:

a = miner_expenses * ($1 + n/100)/current_red5coin_price

In this way, based on the random value n, the developer will either havean earning or a loss.

Miners are the actors that deliver the video streams. As such, theyreceive utility tokens from the developers in exchange for providingcomputational resources to the developer. Miners can try to sell them onthe market to earn USD. The number of miners in the simulation has beenfixed to 3000. Similarly, for the developers, the profits of the minersare simulated as well. This implies that the simulation needs to predictthe expenses that the miners experience when delivering a certain numberof streams to a certain number of users. These predictions have beencalculated by using AWS as a starting point. The AWS calculator has beenused to calculate the cost of delivering a video stream with bandwidth 1Mbs for one hour using a C5.large EC2 instance. The price turned out tobe p=$0.33. Given that this is the price applied by AWS to consumers itis expected that miners will have a lower expense than that to deliverthe video stream. The actual number will depend on their infrastructureand scale. The price p is configurable in the simulation and differentvalues have been used to see the outcomes. The value is used bydevelopers to determine how many tokens they need to send to the miners.The process works as follows:

The price p is used to determine the actual expenses of the miner givenhow many streams and users it is serving

A random number n is drawn from the interval [10,30]

The miner receives an amount of tokens equal to:

a = ($1 + n/100) * red5coins_sent_to_miners

In this way, miners are always trying to maintain a profit between10-30%. Then, the actual profit will be determined when the miners willsell their tokens on the market.

The main role of the bank actor (or stabilizer) is to keep the value ofdigital coins equal to $1 USD. The bank does that by calculating the newsupply of digital coins that needs to be put into the market to lower orincrease the value of digital coins. The supply is dictated by theminers and the bank. The demand on the other hand is dictated by thedevelopers. At each round of the simulation the bank knows the currentvalue and supply of digital coins and the amount of digital coins thatthe bank offered in the previous round. In this way, the bank cancalculate the new supply as well as the amount of digital coins thatwere offered by miners in the previous round. By assuming that such anamount will not change, the bank is able to calculate how many tokens itneeds to offer. During an inflation period the bank will convert reservetokens into utility tokens, and thus it will always make a sell offer.On the other hand, during a deflation period the bank may need to offerno tokens to lower their supply and increase the digital coins value. Infact, if miners are creating a supply of 500 tokens, and the bankcalculates that the overall new supply needs to be 400 tokens, then thebank will not offer any utility tokens as the miners are alreadyoffering more than required. In the last situation depicted, the bankwill also try to buy existing digital coins from the market in order tolower their supply. This corresponds to the digital coins smart contractfulfilling sell requests in the real system documented earlier.

In operation, the original simulation uses a system of beliefs to letactor choose how much they want to offer or pay for digital coins. Thesebeliefs reflect how much an actor thinks a digital coins is valued. Whenan actor wants to sell digital coins, it needs to create an offer for acertain amount of digital coins for a certain price that depends on itsbeliefs. Similarly, an actor that wants to purchase makes a buy offer.The sell and buy offers are then matched by the simulator and theclearing price is used to update the beliefs of the two actors. Thissystem of beliefs was slightly modified. As previously discussed, everyactor in the system has an interest in making digital coins have astable value as that maximizes everyone's returns. This suggests thatactor will try to sell and buy digital coins by using a value of $1 USDbecause they believe that that is its correct value. Therefore, theywill have a belief that $1 USD is the correct digital coins value. Toreflect this observation into the simulation the beliefs are updated asfollows: i) If the offer created by actor is matched to another actor'soffer then the beliefs of those actor are set to $1 USD and ii) If theoffer is not matched then the beliefs are calculated as in the originalsimulation, and thus may be higher or lower than $1 USD

This asymmetric approach has been chosen to keep some randomness in thebelief system and to see whether the system is stable even though notevery actor believes the value of digital coins will become $1 USDagain.

Simulation Results

In this section the results of the simulation are reported. Thefollowing sections will explain the data that has been used as input andreport the results obtained by running the simulator under differentscenarios.

The input data has been generated to cover a period of about threeyears. In particular, the data points simulate a growth in the number ofdevelopers and viewers of the video streams in order to evaluate theresponse of the system. The chart in FIG. 8 shows the number of monthlydevelopers that has been used in the simulation. Considering that around of the simulation is run for every day of a month, then the numberof daily developers in a certain month is equal to the monthlydevelopers divided by thirty. The number of miners has been fixed to3000, and the number of banks is set to one.

FIG. 9 shows the prediction for the number of viewers that eachdeveloper will have in their video streams. It should be noted that thisprediction shows a decreasing value because the growth rate ofdevelopers and viewers per stream is different. In other words, thenumber of developers is expected to grow much more than the number ofviewers in each stream. Therefore, the ratio between the overall numberof video stream viewers and the number of developers will decrease.These predicted values are used in the simulation to determine how manypeople are watching a video stream for each developer, and consequentlyhow much money a developer needs to pay miners.

The simulator also accepts a starting value for the number of tokens inthe reserve pool and a maximum size of it. The initial reserve pooltokens are needed to allow the system to stabilize digital coins in theinitial stage. In fact, in the first round of the simulation the systemhas no idea about what the demand and supply of digital coins will be,and thus the digital coins price will not be stable right away, It willneed some iterations in order to stabalize. The maximum size of thereserve pool represents how many tokens it can hold, and it impacts thetime when the investor pool will be able to start to fill up. Both thesevalues have been set to 5,000 tokens.

The next input is the stream price per miner. This price represents howmuch a miner needs to spend to deliver a single video stream, which isassumed to have bandwidth of 1 Mbs and be running for a length of onehour. An upper bound for this price has been calculated with AWS and itturned out to be $0.33. This price influences how much money the minerswill ask of the developers to deliver the video stream.

The last input conditions are related to the actor. Each of them needsto start with a certain amount of money and digital coins in theiraccounts: i) Developers: They have been configured to have $10,000 intheir account and 1,000 digital coins. Moreover, they are pushed to buymore digital coins as long as they have some money in their account andhave less than 3,000 digital coins, ii) Miners: They have beenconfigured to have $10,000 in their account and 0 digital coins. As soonas they earn digital coins they will try to sell it on the market toearn USD, and iii) Bank: It has been configured to have $1,000,000 inits account to be able to buy tokens from the market if needed.Moreover, the bank is configured with 5,000,000 digital coinsrepresenting the maximum supply of tokens in the system. The simulationwas run with 5,000,000 to make it faster. It should be noted, that theresults are the same even as the number of digital coins increases. Forexample, the bank can be configured with 500,000,000 tokens and shouldyield similar results as the simulation involving 5,000,000 tokens. Thatis because, a higher number of tokens only allows the bank to sell tomore developers. On the other hand, the stabilization of digital coinsis not impacted because it's efficacy depends mostly on the size of thereserve pool.

Two different simulations have been run to show the effects of thereserve tokens in the stabilization of digital coins. The results of thefirst simulations can be seen in FIG. 10. These results show the effectsof not having any mechanism to stabilize the price of digital coins.That is, reserve tokens were ignored. It can be noticed that in theinitial months the price of digital coins is somewhat constant but withconsiderable variations. After one year and a half the price starts toincrease super exponentially until reaching a limit.

FIG. 11 shows the results obtained when the reserve tokens were used tostabilize the price of digital coins. It can be seen that besides somelimited spikes most of the time the value of digital coins is verystable around 1 USD ±5%. The initial spikes are due to the fact that thesimulation needs some rounds to stabilize the token. That's because assoon as the system is started, the bank does not know how much thedemand and supply will be. Moreover, the demand changes considerably inthe first iterations as more developers spend tokens and try to buy newones. This causes, digital coins to have their price changeconsiderably. During this period, the bank is using the initial reservetokens to limit these spikes as much as possible and regulate the priceof digital coins. A prefilled reserve pool with a capacity of 5,000tokens is able to contain the initial spike and stabilize digital coinsin about 15 rounds which represent 15 days. The second biggest spike iscontained in about 15 rounds as well. After that, once the token hasbeen stabilized it never experiences a change above ±5%.

In the simulation, an inflation period was triggered, followed by adeflation one two times in a row and evaluate the response of thesystem. The results are shown in FIG. 12. The simulation consisted instarting the network with a small number of developers and video streamsin order to allow the system to reach stability. After that, the numberof daily developers was increased suddenly as well as the number ofvideo streams. This created a big demand for digital coins, that giventheir limited supply, generated a spike in their price and thustriggered an inflation period. After that the number of developers waskept constant to see how long it would take for the system to stabilize.From the chart it can be seen that the highest value reached by digitalcoins is $2 and after that it returns back to $1 in about 5 rounds ofthe simulation. Therefore, the system responds quickly and it is able tostabilize digital coins. These results coupled with the fast responsesuggest that an inflation period is unlikely to reduce the demand ofdevelopers and make the network less popular.

The opposite was tested as well. To do so, the number of developers wasdecreased abruptly. This creates an oversupply situation that devaluesdigital coins. During the deflation period the number of developers wasstill kept low to see whether a limited number of transactions wouldlimit the ability of the system to stabilize again. The results showthat that is not the case. Contrary to the previous situation the systemis slower in stabilizing but this slowness is compensated by the factthat the minimum value reached by digital coins is $0.87. These resultssuggest that even during a deflation period when the number oftransactions in the system may be limited, the system is still able tostabilize while avoiding having digital coins lose all of its value. Atthe same time, the limited devaluation suggests that developers andminers are likely to continue to use the system as usual, and thereforethe network will maintain its popularity.

Two different simulations have been run to show how the investor pool ispredicted to grow over time. One simulation using a stream price perminer equal to $0.05 while the other simulation used a price of $0.15.The results for the first case are reported in FIG. 13. The chart showshow the investor pool grows over time and is emptied at the end of everyquarter. It can be noticed that the investor pool is constantly growingat a constant rate. This suggests that the reserve pool is full and thatthe majority of the time is spent in a stable period. It can be noticedthat the lines are not perfectly straight but have some small bumps.That implies that in those moments there must have a been a smallinflation period that required the use of some reserve tokens, and thusemptied a part of the reserve pool. Subsequently the reserve tokens thatwere produced right after that were put in the reserve pool, thuspreventing the investor pool from growing at a constant rate.

FIG. 14 shows the results for when the stream price is $0.15. Thebehavior is similar to the previous case with the only difference that ahigher number of reserve tokens in paid out. This happens because eventhough the starting conditions are the same in both simulations, theamount of tokens paid to the miners is different and depends linearly onthe stream price. Therefore, a higher volume of digital coins istransacted in the second simulation. This, in turn, implies a highermint rate of reserve tokens as well. That is because, during a stableperiod, each digital coin transaction mints an equal amount of reservetokens that are inserted into the reserve or investor pool, and this inturn increases the investors' payout.

Any suitable computing device can be used to implement the computingdevices 12, 14, 16, 18, and methods/functionality described herein andbe converted to a specific system for performing the operations andfeatures described herein through modification of hardware, software,and firmware, in a manner significantly more than mere execution ofsoftware on a generic computing device, as would be appreciated by thoseof skill in the art. One illustrative example of such a computing device1500 is depicted in FIG. 15. The computing device 1500 is merely anillustrative example of a suitable computing environment and in no waylimits the scope of the present invention. A “computing device,” asrepresented by FIG. 15, can include a “workstation,” a “server,” a“laptop,” a “desktop,” a “hand-held device,” a “mobile device,” a“tablet computer,” or other computing devices, as would be understood bythose of skill in the art. Given that the computing device 1500 isdepicted for illustrative purposes, embodiments of the present inventionmay utilize any number of computing devices 1500 in any number ofdifferent ways to implement a single embodiment of the presentinvention. Accordingly, embodiments of the present invention are notlimited to a single computing device 1500, as would be appreciated byone with skill in the art, nor are they limited to a single type ofimplementation or configuration of the example computing device 1500.

The computing device 1500 can include a bus 1510 that can be coupled toone or more of the following illustrative components, directly orindirectly: a memory 1512, one or more processors 1514, one or morepresentation components 1516, input/output ports 1518, input/outputcomponents 1520, and a power supply 1524. One of skill in the art willappreciate that the bus 1510 can include one or more busses, such as anaddress bus, a data bus, or any combination thereof. One of skill in theart additionally will appreciate that, depending on the intendedapplications and uses of a particular embodiment, multiple of thesecomponents can be implemented by a single device. Similarly, in someinstances, a single component can be implemented by multiple devices. Assuch, FIG. 15 is merely illustrative of an exemplary computing devicethat can be used to implement one or more embodiments of the presentinvention, and in no way limits the invention.

The computing device 1500 can include or interact with a variety ofcomputer-readable media. For example, computer-readable media caninclude Random Access Memory (RAM); Read Only Memory (ROM);Electronically Erasable Programmable Read Only Memory (EEPROM); flashmemory or other memory technologies; CD-ROM, digital versatile disks(DVD) or other optical or holographic media; magnetic cassettes,magnetic tape, magnetic disk storage or other magnetic storage devicesthat can be used to encode information and can be accessed by thecomputing device 1500.

The memory 1512 can include computer-storage media in the form ofvolatile and/or nonvolatile memory. The memory 1512 may be removable,non-removable, or any combination thereof. Exemplary hardware devicesare devices such as hard drives, solid-state memory, optical-discdrives, and the like. The computing device 1500 can include one or moreprocessors that read data from components such as the memory 1512, thevarious I/O components 1516, etc. Presentation component(s) 1516 presentdata indications to a user or other device. Exemplary presentationcomponents include a display device, speaker, printing component,vibrating component, etc.

The I/O ports 1518 can enable the computing device 1500 to be logicallycoupled to other devices, such as I/O components 1520. Some of the I/Ocomponents 1520 can be built into the computing device 1500. Examples ofsuch I/O components 1520 include a microphone, joystick, recordingdevice, game pad, satellite dish, scanner, printer, wireless device,networking device, and the like.

As utilized herein, the terms “comprises” and “comprising” are intendedto be construed as being inclusive, not exclusive. As utilized herein,the terms “exemplary”, “example”, and “illustrative”, are intended tomean “serving as an example, instance, or illustration” and should notbe construed as indicating, or not indicating, a preferred oradvantageous configuration relative to other configurations. As utilizedherein, the terms “about”, “generally”, and “approximately” are intendedto cover variations that may existing in the upper and lower limits ofthe ranges of subjective or objective values, such as variations inproperties, parameters, sizes, and dimensions. In one non-limitingexample, the terms “about”, “generally”, and “approximately” mean at, orplus 10 percent or less, or minus 10 percent or less. In onenon-limiting example, the terms “about”, “generally”, and“approximately” mean sufficiently close to be deemed by one of skill inthe art in the relevant field to be included. As utilized herein, theterm “substantially” refers to the complete or nearly complete extend ordegree of an action, characteristic, property, state, structure, item,or result, as would be appreciated by one of skill in the art. Forexample, an object that is “substantially” circular would mean that theobject is either completely a circle to mathematically determinablelimits, or nearly a circle as would be recognized or understood by oneof skill in the art. The exact allowable degree of deviation fromabsolute completeness may in some instances depend on the specificcontext. However, in general, the nearness of completion will be so asto have the same overall result as if absolute and total completion wereachieved or obtained. The use of “substantially” is equally applicablewhen utilized in a negative connotation to refer to the complete or nearcomplete lack of an action, characteristic, property, state, structure,item, or result, as would be appreciated by one of skill in the art.

Numerous modifications and alternative embodiments of the presentinvention will be apparent to those skilled in the art in view of theforegoing description. Accordingly, this description is to be construedas illustrative only and is for the purpose of teaching those skilled inthe art the best mode for carrying out the present invention. Details ofthe structure may vary substantially without departing from the spiritof the present invention, and exclusive use of all modifications thatcome within the scope of the appended claims is reserved. Within thisspecification embodiments have been described in a way which enables aclear and concise specification to be written, but it is intended andwill be appreciated that embodiments may be variously combined orseparated without parting from the invention. It is intended that thepresent invention be limited only to the extent required by the appendedclaims and the applicable rules of law.

It is also to be understood that the following claims are to cover allgeneric and specific features of the invention described herein, and allstatements of the scope of the invention which, as a matter of language,might be said to fall therebetween.

What is claimed is:
 1. A method for maintaining a stabilized digitalcurrency, the method comprising: monitoring, by a processor, for one ormore digital transactions in a service provider network utilizingdigital coins; minting and storing a predetermined percentage of reservetokens of the digital coins in a reserve pool; providing, by aprocessor, compensation for the one or more digital transactions asutility tokens of the digital coins; and monitoring, by a processor, acurrent value of the digital coins for the digital currency forinflation or deflation.
 2. The method of claim 1, wherein the monitoringthe current value of the digital coins for the digital currency forinflation or deflation comprises: monitoring an amount of supply of thedigital coins; identifying an inflation period or deflation period inthe digital coins based on the current value and the amount of supply ofthe digital coins; determining an amount for a new supply of digitalcoins to stabilize the inflation period or deflation period; andconverting at least one of utility tokens to reserve tokens or reservetokens to utility tokens to meet the new supply of digital coins and thevalue of the digital coins is stabilized.
 3. The method of claim 2,wherein the inflation period requires converting the utility tokens tothe reserve tokens.
 4. The method of claim 2, wherein the deflationperiod requires converting the reserve tokens to the utility tokens. 5.The method of claim 1, wherein the digital coins include utility tokensused for trading and compensation for services provided.
 6. The methodof claim 1, further comprises maintaining the reserve tokens in a fixedsize reserve pool and a variable size investor pool.
 7. The method ofclaim 6, wherein the reserve tokens are distributed within at least oneof the reserve pool and the investor pool to stabilize the utility tokenvalues.
 8. The method of claim 7, wherein the reserve tokens in theinvestor pool are periodically converted to payment to investors.
 9. Themethod of claim 1, wherein the digital currency includes security tokensrepresenting tradeable shares that are used to pay periodic dividends.10. The method of claim 9, wherein the investor pool is configured to:store reserve tokens from a current period of time in a first portion;store reserve tokens from a previous period of time in a second portion;and pay out the reserve tokens the previous period of time to investorsat an end of the current period of time.
 11. A system for maintaining astabilized digital currency, the system comprising: at least one minernode for triggering digital currency transactions that affect at leastone of a current value or an amount of supply of digital coins for thedigital currency; and a stabilizer device designed to: monitor for oneor more digital transactions in a service provider network utilizingdigital coins; mint and store a predetermined percentage of reservetokens of the digital coins in a reserve pool; provide compensation forthe one or more digital transactions as utility tokens of the digitalcoins; and monitor current value of the digital coins for the digitalcurrency for inflation or deflation.
 12. The system of claim 11, whereinthe monitoring the current value of the digital coins for the digitalcurrency for inflation or deflation comprises: monitoring an amount ofsupply of the digital coins; identifying an inflation period ordeflation period in the digital coins based on the current value and theamount of supply of the digital coins; determining an amount for a newsupply of digital coins to stabilize the inflation period or deflationperiod; and converting at least one of utility tokens to reserve tokensor reserve tokens to utility tokens to meet the new supply of digitalcoins and the value of the digital coins is stabilized.
 13. The systemof claim 12, wherein the inflation period requires converting theutility tokens to the reserve tokens.
 14. The system of claim 12,wherein the deflation period requires converting the reserve tokens tothe utility tokens.
 15. The system of claim 11, wherein the digitalcoins include utility tokens used for trading and compensation forservices provided.
 16. The system of claim 11, further comprisesmaintaining the reserve tokens in a fixed size reserve pool and avariable size investor pool.
 17. The system of claim 16, wherein thereserve tokens are distributed within at least one of the reserve pooland the investor pool to stabilize the utility token values.
 18. Thesystem of claim 17, wherein the reserve tokens in the investor pool areperiodically converted to payment to investors.
 19. The system of claim11, wherein the digital currency includes security tokens representingtradeable shares that are used to pay periodic dividends.
 20. The systemof claim 9, wherein the investor pool is configured to: store reservetokens from a current period of time in a first portion; store reservetokens from a previous period of time in a second portion; and pay outthe reserve tokens the previous period of time to investors at an end ofthe current period of time.
 21. A computer program product formaintaining a stabilized digital currency, the computer program productcomprising a computer readable storage medium having programinstructions embodied therewith, the program instructionsreadable/executable by one or more computing devices to cause the one ormore computing devices to: monitor for one or more digital transactionsin a service provider network utilizing digital coins; mint and store apredetermined percentage of reserve tokens of the digital coins in areserve pool; provide compensation for the one or more digitaltransactions as utility tokens of the digital coins; and monitor currentvalue of the digital coins for the digital currency for inflation ordeflation.